Holding Company

A holding company is an entity that does not actually carry out any business. It is created and then it creates and owns a business in order to limit liability.

Although a holding company does not do any of the actual business, it maintains the wealth of the company that it owns, while having limited exposure to liability. This is possible because owners of the holding company do not directly own the business. Furthermore, holding companies can control more than one business, however, it can become more difficult to function. The holding entity should then own the significant assets of the business and lease them out, protecting them from the liability within the business. Also, the holding company can fund the business through loans. Overall, a holding entity can be beneficial by increasing the wealth with little or no liability issues.

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